Factors that Influence Your Electric Bill

August is typically one of the warmest months of the year, and that means air conditioners across our community are working overtime to keep homes comfortable. During periods of extreme heat, customers who see a sharp increase in their electric bill may wonder what factors contribute to the cost of electricity.

At OPD5, we believe understanding your electric bill is an important part of being an informed member. While the total amount due seems like a single number, it actually reflects several different costs associated with delivering reliable electricity to your home or business.

The largest factor is usually the amount of energy you use. Electricity is measured in kilowatt-hours (kWh). The more energy your household consumes, the more kilowatt-hours register on the meter, the higher your bill will be. During the summer, air conditioning is typically the largest driver of increased energy use. When temperatures climb into the 100s or higher, your cooling systems run longer and more frequently, consuming significantly more electricity than they do during milder weather. 

The cost of generating or purchasing electricity is perhaps the most significant factor in your per-kilowatt cost. The OPD5 portfolio has a diverse mix of resources. About 23 percent of our portfolio has historically come from hydropower generated at federal dams along the Colorado River. We have been fortunate that these legacy resources have come to us relatively cheaply. Another 16 percent of our portfolio comes from a renewable energy contract with a solar generator operating directly adjacent to our territory. The cost of this solar energy is also low, similar to our hydropower resources. For the remainder of our power needs, OPD5 has a purchase agreement with Tenaska Energy Market.  While this contract provides the stability of a fixed cost over its three-year term, that price is significantly higher because it is based on a multitude of market factors including fuel prices, weather patterns, generation capacity and regional demand.

Of course, transmission costs also play a role in the per-kilowatt-hour charge on your bill. Before electricity can be delivered to your home, it must travel across a network of high-voltage transmission lines that connect power plants to local distribution systems. Transmission equipment requires ongoing maintenance, upgrades and expansions to ensure reliability, especially as electricity demand continues to grow.

Closer to home, OPD5 maintains the local electric distribution system including utility poles, power lines, transformers, substations and other essential equipment that safely delivers power to all our customers. Maintaining this equipment is covered through a monthly base charge. This is a flat monthly fee all customers pay, regardless of how much electricity they use. This fixed fee ensures all members pay a fair share of the basic, operational costs required to keep the local power grid reliable and ready to serve your home or business. Whether a member uses a little electricity or a lot, we must maintain infrastructure and have crews, equipment and resources available to provide electricity around the clock.

The good news is that simple steps to lower energy use can make a meaningful difference. Setting your thermostat a few degrees higher when you’re away, regularly replacing dirty HVAC filters, using ceiling fans, sealing air leaks are just a few ways you can help reduce your household energy consumption and lower your bill.

OPD5’s mission is to provide safe, reliable and affordable electricity while being transparent about the factors that impact energy costs. We understand every dollar matters, and we are committed to making smart investments that keep the lights on and support the communities we serve.

If you ever have questions about your electric bill or any of our programs designed to help you save, please reach out. We’re here to help you make informed decisions that work for your household.